Under the Certificate of Incorporation (the "Certificate") and Bylaws (the
"Bylaws") of the Company, the number of directors on the Company's Board of
Directors (the "Board") may be fixed by resolution of a majority of the Board at
any number between two and eighteen members. The Board has currently fixed the
number of directors at nine (9). The Certificate and Bylaws also divide the
Board into three classes designated as Class I, Class II and Class III. The
current terms of the directors in Class II are set to expire at the Annual
Meeting. Pursuant to the Certificate and Bylaws, the Board has nominated the
persons set forth below as Class II directors to serve a three-year term that
will expire at the annual meeting of stockholders in 2003.
H.W. MCKAY BELK
KARL G. HUDSON, JR.
B. FRANK MATTHEWS, II
The affirmative vote of a plurality of the votes represented by the shares
of both Class A Common Stock and Class B Common Stock taken together, present in
person or represented by proxy at the Annual Meeting and entitled to vote, is
required to elect each of the directors being elected at the Annual Meeting.
Broker non-votes will not be counted as votes either for or against the election
of the Class II directors.
The Board has no reason to believe that any of the nominees for the office
of director will be unavailable for election as a director. However, if at the
time of the Annual Meeting any of the nominees should be unable or decline to
serve, the persons named in the proxy will vote for such substitute nominees,
vote to allow the vacancy created thereby to remain open until filled by the
Board, or vote to reduce the number of directors for the ensuing year, as the
Board recommends. In no event, however, can the proxy be voted to elect more
than three directors.
In addition to the three nominees, there are six other directors continuing
to serve on the Board, whose terms expire in 2001 and 2002. See "Management of
the Company -- Directors".
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF H.W. MCKAY
BELK, KARL G. HUDSON, JR. AND B. FRANK MATTHEWS, II FOR THE OFFICE OF CLASS II
DIRECTOR.
MANAGEMENT OF THE COMPANY
DIRECTORS
Set forth below are the nominees for election to the Board as Class II
directors and the current directors serving as Class I and Class III directors.
Also set forth below as to each nominee and current director is his or her age,
the year in which he or she was first elected a director, a brief description of
his or her principal occupation and business experience during the past five
years, directorships of certain companies presently held by him or her, and
certain other information, which information has been furnished by the
respective individuals.
NOMINEES FOR ELECTION
CLASS II DIRECTORS -- TERM EXPIRING 2003
MR. H.W. MCKAY BELK
Age 43
Director Since 1998
Mr. Belk has been President, Merchandising and Marketing of the Company
since May 1998 and is an officer and director of various subsidiaries of the
Company. Mr. Belk also served as an officer and director of most of the 112
separate Belk companies (the "Belk Companies") until May 1998. Mr. Belk has been
employed in the Belk retail organization in various positions since June 1979.
Mr. Belk currently serves as Chairman of the Charlotte Chamber of Commerce and
is a member of the Boards of Directors of Coca-Cola
2
Consolidated Bottling Co., the Charlotte Latin School and Crossnore Schools and
the Board of Visitors of the University of North Carolina at Charlotte. Mr. Belk
is the brother of Thomas M. Belk, Jr. and John R. Belk and the nephew of John M.
Belk and Sarah Belk Gambrell.
MR. KARL G. HUDSON, JR.
Age 80
Director Since 1998
Mr. Hudson was employed in the Belk store organization from 1933 until his
retirement in 1989. During that time, he served in many positions in the
organization, including Executive Vice President, Partner and as a director of
the Hudson-Belk Company from 1967 until 1989. He also served as Executive Vice
President, Partner and as a director of the Belk-Hudson group of stores in
Alabama and Mississippi from 1974 until 1989. Mr. Hudson served as a director of
a number of the Belk Companies until May 1998 and has also served on numerous
management committees of Belk Stores Services, Inc. ("BSS"). Mr. Hudson has
served on the Board of Directors and as President of PMC, Inc., a hotel and real
estate investment company. He has also served as a member of the Boards of
Directors of Carolina Power & Light Company, the Durham Corporation, Davidson
College, St. Andrews College, Peace College and Union Theological Seminary, the
Raleigh Chamber of Commerce, the United Fund and the Raleigh Merchant's Bureau.
MR. B. FRANK MATTHEWS, II
Age 72
Director Since 1998
Mr. Matthews has been Vice Chairman of the Board since June 1999. Mr.
Matthews was employed in the Belk store organization from 1937 until September
1999. During that time he served in many positions, including Executive Vice
President, Partner and a director of the Matthews-Belk group from 1971 to May
1998, and as a Divisional President of the Company from May 1998 until September
1999. Mr. Matthews has served on numerous committees, including service as
Chairman of the Merchandise and Sales Promotion Committee and the Employee
Benefits Committee of BSS. Mr. Matthews has served as Chairman of the Board of
Directors of Gaston Federal Bank, director of Public Service Company of North
Carolina, Inc. and President of the Community Foundation of Gaston County. He is
a member of the Board of Trustees of the First Gaston Foundation and is a
director of the Greater Gastonia Development Corporation. Mr. Matthews has also
served as President of the Gastonia Downtown Development Corporation, the United
Way of Gaston County and the Gastonia Merchant's Association. He has been a
director of the Gaston Chamber of Commerce, the Gaston County YMCA, the Gastonia
Industrial Diversification Commission and the Gastonia Kiwanis Club, and trustee
of Davidson College and Chatham Hall.
INCUMBENT DIRECTORS
CLASS I DIRECTORS -- TERM EXPIRING 2002
MR. THOMAS M. BELK, JR.
Age 45
Director Since 1998
Mr. Belk has been President, Store Divisions and Real Estate of the Company
since May 1998 and is an officer and director of various subsidiaries of the
Company. Mr. Belk also served as an officer and director of most of the Belk
Companies until May 1998. Mr. Belk has been employed in the Belk retail
organization in various positions since 1981. Mr. Belk serves on the Boards of
Advisors of the Wachovia Bank, N.A., Carolinas Healthcare System, Kenan Flagler
Business School at UNC-Chapel Hill and the University of North Carolina at
Charlotte Foundation. He serves on the Boards of Directors of the Mecklenburg
County Council of Boy Scouts of America, Charlotte Country Day School, American
Humanics, Inc. and the Research Triangle Foundation of North Carolina. Mr. Belk
is the brother of H.W. McKay Belk and John R. Belk and the nephew of John M.
Belk and Sarah Belk Gambrell.
3
MR. J. KIRK GLENN, JR.
Age 57
Director Since 1998
Mr. Glenn served on the Boards of Directors of a number of the Belk
Companies from 1983 until May 1998 and currently serves on the Board of
Directors of BSS. Mr. Glenn is the Chairman and Manager of Quality Oil Company,
LLC and Reliable Tank Line, LLC and is General Partner of Quality Investments,
Limited Partnership in Winston-Salem, North Carolina. He has served as Chairman
of the Boards of Directors of Crisis Control Ministry, Special Children's
School, and Winston-Salem Business, Inc. and as a member of the Boards of
Directors of Hach Associates, Inc., Advocacy for the Poor and Tanglewood Park
Foundation, Inc. Mr. Glenn is also a member of the Finance Committee of the
United Way of Forsyth County and the Forsyth County Advisory Board of Wachovia
Bank, N.A.
MRS. SARAH BELK GAMBRELL
Age 82
Director Since 1998
Mrs. Gambrell served as a director of many of the Belk Companies until May
1998 and served as Vice Chairman and President of various Belk Companies for
many years. She is on the Board of the Union Theological Seminary; Princeton
Theological Seminary (emeritus); Warren Wilson College; Furman University;
Johnson C. Smith University; the North Carolina Community Foundation; Community
School of the Arts in Charlotte, N.C.; WDAV in Davidson, N.C.; the Charlotte
Philharmonic; YWCA of New York City (honorary); Trustee, National Board of the
YWCA; the Parkinson's Disease Foundation in New York; the Cancer Research
Institute, New York (honorary) and is a member of the Fashion Group of New York.
Mrs. Gambrell is the sister of John M. Belk and the aunt of Thomas M. Belk, Jr.,
H.W. McKay Belk and John R. Belk.
CLASS III DIRECTORS -- TERM EXPIRING 2001
MR. JOHN M. BELK
Age 80
Director Since 1998
Mr. Belk has been Chairman of the Board and Chief Executive Officer of the
Company since May 1998 and is an officer and director of various subsidiaries of
the Company. Mr. Belk served as Chairman of the Board of most of the Belk
Companies for many years and as the Chief Executive Officer of most of the Belk
Companies for more than 40 years. Mr. Belk was Mayor of the City of Charlotte,
N.C. from June 1969 until December 1977. Mr. Belk is a Director emeritus of
Wachovia Corporation and Quantum Chemical Corporation and serves on the Boards
of Directors of Coca-Cola Bottling Co. Consolidated, Inc. and TXI and has also
served on the Boards of Lowe's Companies and PMC, Inc. He is a past Chairman of
the National Retail Federation and President of the Charlotte Chamber of
Commerce. He is on the Board of Trustees of Davidson College and Union
Theological Seminary, the Board of Visitors of the University of North Carolina
at Charlotte, and is a member of numerous business and civic committees,
including the North Carolina Council on Management and Development and the
Business Partnership Foundation of the University of South Carolina, Columbia.
Mr. Belk is the brother of Sarah Belk Gambrell and the uncle of Thomas M. Belk,
Jr., H.W. McKay Belk and John R. Belk.
MR. JOHN R. BELK
Age 41
Director Since 1998
Mr. Belk has been President, Finance, Systems and Operations of the Company
since May 1998 and is an officer and director of various subsidiaries of the
Company. Mr. Belk also served as an officer and director of most of the Belk
Companies until May 1998. Mr. Belk has been employed in the Belk retail
organization in various positions since 1986. Mr. Belk serves on the Boards of
Directors of Alltel Corporation, Ruddick
4
Corporation and Presbyterian Health Services Corp. and on the First Union
Mid-Atlantic Board. He also serves on the Boards of Central YMCA and United Way
of Central Carolinas. Mr. Belk is the brother of Thomas M. Belk, Jr. and H.W.
McKay Belk and the nephew of John M. Belk and Sarah Belk Gambrell.
MR. JOHN A. KUHNE
Age 56
Director Since 1998
Mr. Kuhne served as a director of a number of the Belk Companies and as
President of Belk-Simpson Company, Greenville, South Carolina from 1983 to May
1998. He is Chairman of the Company's Benefits Investment Subcommittee. Mr.
Kuhne is also Vice Chairman of the Board of Directors of Summit Financial
Corporation and is a past trustee of Presbyterian College and Furman University.
OPERATION OF THE BOARD OF DIRECTORS
Audit Committee. The Company has an Audit Committee of the Board that is
composed of Messrs. Karl G. Hudson, Jr., B. Frank Matthews, II, J. Kirk Glenn,
Jr., John A. Kuhne and John R. Belk. The Audit Committee is responsible for,
among other things, recommending the engagement of the Company's independent
auditors, reviewing with the independent auditors the plans and results of the
audit engagement, reviewing the independence of the independent auditors,
considering the range of audit and non-audit fees and reviewing the adequacy of
the Company's internal accounting controls. The Audit Committee may exercise
such additional authority as may be prescribed from time to time in the
Committee's charter or by resolution of the Board. During fiscal year 2000, the
Audit Committee held four meetings.
Executive Committee. The Company has an Executive Committee of the Board
that is composed of Messrs. John M. Belk, Thomas M. Belk, Jr., H.W. McKay Belk
and John R. Belk. The Executive Committee possesses all of the powers of the
Board, except the power to authorize the issuance of stock, approve mergers,
declare dividends and certain other powers specifically reserved under the
Delaware General Corporation Law to the Board. The Executive Committee may
exercise such additional authority as may be prescribed from time to time by
resolution of the Board. The Executive Committee is expected to act in
circumstances where it is not feasible or is impractical to obtain full Board
action or as otherwise directed by the Board. During fiscal year 2000, the
Executive Committee held no formal meetings, but took various actions by written
consent.
The Company does not have a Nominating Committee.
MEETINGS OF DIRECTORS
During the fiscal year ended January 29, 2000, the Board held four regular
meetings. All of the directors attended all of the meetings of the Board and of
the committees on which they served.
DIRECTORS' COMPENSATION
The Company pays its directors an annual fee of $20,000, a meeting fee of
$1,000 for attendance (in person or by telephone) at each meeting of the Board
and reimbursement of expenses incurred in attending meetings.
5
MANAGEMENT COMMON STOCK OWNERSHIP
The following table sets forth certain information regarding the beneficial
ownership of shares of Common Stock as of April 15, 2000 by (i) each of the
Company's directors, (ii) the Company's Named Executive Officers (as hereinafter
defined) and (iii) such directors and all executive officers as a group.
SHARES OF CLASS A PERCENT SHARES OF CLASS B PERCENT
COMMON STOCK OF COMMON STOCK OF
NAME BENEFICIALLY OWNED(1) CLASS(2) BENEFICIALLY OWNED(1) CLASS(3)
---- --------------------- -------- --------------------- --------
John M. Belk(4)(5)(6)(7)(8)(9)........... 14,347,819 26.7% 0 *
Thomas M. Belk, Jr.(10).................. 1,850,416 3.4 0 *
H.W. McKay Belk(11)...................... 1,600,424 3.0 0 *
John R. Belk(12)......................... 1,599,053 3.0 0 *
Sarah Belk Gambrell(8)(9)................ 9,687,509 18.0 0 *
J. Kirk Glenn, Jr.(13)(14)(15)........... 4,419,614 8.2 0 *
Karl G. Hudson, Jr....................... 5,866 * 0 *
B. Frank Matthews,
II(16)(17)(18)(19)(20)................. 921,671 1.7 0 *
John A. Kuhne(21)........................ 311,636 * 0 *
Ralph A. Pitts........................... 0 * 12,000 1.2%
All executive officers and directors as a
group (15 persons)..................... 34,752,295 64.6% 12,300 1.3%
* Beneficial ownership represents less than 1% of the applicable class of the
Company's outstanding common stock.
(1) Under the rules of the Securities and Exchange Commission, a person is
deemed to be a "beneficial owner" of a security if that person has or
shares "voting power", which includes the power to vote or to direct the
voting of such security, or "investment power", which includes the power to
dispose of or to direct the disposition of such security. A person also is
deemed to be a beneficial owner of any securities which that person has the
right to acquire within sixty (60) days. Under these rules, more than one
person may be deemed to be a beneficial owner of the same securities and a
person may be deemed to be a beneficial owner of securities as of which he
has no economic or pecuniary interest. Except as set forth in the footnotes
below, the persons named above have sole voting and investment power with
respect to all shares of Class A Common Stock shown as being beneficially
owned by them.
(2) 53,770,664 shares of Class A Common Stock were outstanding as of April 15,
2000.
(3) 961,901 shares of Class B Common Stock were outstanding as of April 15,
2000.
(4) Includes 2,079,910 shares held by Montgomery Investment Company, of which
John M. Belk is the majority shareholder.
(5) Includes 1,484,374 shares held by Brothers Investment Company, which
corporation is equally owned by John M. Belk and the heirs of Thomas M.
Belk. Voting and investment power is shared by John M. Belk and Katherine
McKay Belk.
(6) Includes 15,448 shares held by Mary Claudia, Inc., of which John M. Belk is
the majority shareholder.
(7) Includes 6,555 shares held by Claudia Watkins Belk Grantor Trust dated
2/23/96, 21,862 shares held by Claudia W. Belk, Tr. u/a f/b/o Mary Claudia
Belk and 102,070 shares held by Mary Claudia Belk Irrevocable Trust dated
1/4/94. Claudia W. Belk, Trustee, is John M. Belk's wife.
(8) Includes 1,140,080 shares held in several trusts established by the Will of
W. H. Belk for the benefit of his children. Voting and investment power of
the trusts for John M. Belk and Thomas M. Belk is shared by John M. Belk,
Sarah Belk Gambrell, Henderson Belk and W. H. Belk, Jr. Voting and
investment power of the trusts for Sarah Belk Gambrell, W. H. Belk, Jr.,
and Henderson Belk is shared by John M. Belk, Sarah Belk Gambrell,
Henderson Belk, W. H. Belk, Jr. and Irwin Belk.
(9) Includes 1,436,385 shares held in several trusts established by the Will of
Mary I. Belk for the benefit of her children. Voting and investment power
of the trusts for John M. Belk and Thomas M. Belk is shared by John M.
Belk, Sarah Belk Gambrell, Henderson Belk and W. H. Belk, Jr. Voting and
investment power of the trusts for Sarah Belk Gambrell, W. H. Belk, Jr. and
Henderson Belk is shared by John M. Belk, Sarah Belk Gambrell, Henderson
Belk, W. H. Belk, Jr. and Irwin Belk.
6
(10) Includes 227,311 shares held by Thomas M. Belk, Jr. as custodian for his
minor children, 240,585 shares held as custodian for the minor children of
his brother, H.W. McKay Belk, and 25,511 shares held by his wife, Sarah F.
Belk.
(11) Includes 248,720 shares held by H.W. McKay Belk as custodian for his minor
children and 27,022 shares held by his wife, Nina F. Belk.
(12) Includes 212,569 shares held by John R. Belk as custodian for his minor
children and 23,575 shares held by his wife, Kimberly D. Belk.
(13) Includes 871 shares held by his wife, Madlon C. Glenn.
(14) Includes 1,501,410 shares held by James K. Glenn, Jr., Trustee under Will
of Daisy Belk Mattox, 587,582 shares held by John Belk Stevens Trust U/W
ITEM III, Section C f/b/o James Kirk Glenn, Jr., et al, and 391,897 shares
held by John Belk Stevens Trust U/W ITEM III, Section A f/b/o Sara S.
Glenn. Voting and investment power is vested in J. Kirk Glenn, Jr., the
Trustee of each trust.
(15) Includes 1,766,100 shares held by the Estate of David Belk Cannon. Voting
and investment power is shared by the co-Executors who are J. Kirk Glenn,
Jr., Eugene R. Matthews and Betty F. Buchanan.
(16) Includes 166,707 shares held by First Union National Bank of N.C., B. Frank
Matthews, II and Annabelle Z. Royster, Co-Trustees under the Will of J. H.
Matthews, Jr. The Trustees named have voting and investment power with
respect to such shares.
(17) Includes 75,620 shares held by Robinson Investment Company.
(18) Includes 500 shares held by his wife, Betty C. Matthews.
(19) Includes 422,148 shares held by Matthews Group Limited Partnership.
(20) Includes 1,218 shares held by Elizabeth M. Welton Estate, 22,782 shares
held by Elizabeth Matthews Welton Family Limited Partnership and 232,196
shares held by Elizabeth Matthews Welton Family Limited Partnership Phase
II. B. Frank Matthews, II, Mrs. Welton's brother, is the Executor of her
estate.
(21) Includes 289,876 shares held by his wife, Lucy S. Kuhne.
7
PRINCIPAL STOCKHOLDERS
The table below sets forth certain information as of April 15, 2000
concerning persons (in addition to those identified in the section entitled
"Management Common Stock Ownership") known to the Board to be a "beneficial
owner" as such term is defined by the rules of the Securities and Exchange
Commission, of more than 5% of the outstanding shares of Class A Common Stock
and Class B Common Stock.
SHARES OF CLASS A PERCENT SHARES OF CLASS B PERCENT
COMMON STOCK OF COMMON STOCK OF
NAME AND ADDRESS BENEFICIALLY OWNED(1) CLASS(2) BENEFICIALLY OWNED(1) CLASS(3)
---------------- --------------------- -------- --------------------- --------
Katherine McKay Belk(4)(5)................ 6,013,844 11.2% 0 *
2801 West Tyvola Road
Charlotte, NC 28217
John C. Daughtridge....................... 0 * 136,777 14.2%
1600 Morganton Road
Pinehurst, NC 28374
John B. Daughtridge(6)(7)................. 0 * 108,098 11.2
16 Guerard Road
Charleston, SC 29407
Harriett D. Harris(8)..................... 0 * 124,668 13.0
131 S. Battery
Charleston, SC 29401
Sara Dew Misner........................... 0 * 147,091 15.3
5558 Hackberry Cove
Memphis, TN 38120
* Beneficial ownership represents less than 1% of the applicable class of the
Company's outstanding common stock.
(1) Under the rules of the Securities and Exchange Commission, a person is
deemed to be a "beneficial owner" of a security if that person has or shares
"voting power", which includes the power to vote or to direct the voting of
such security, or "investment power", which includes the power to dispose of
or to direct the disposition of such security. A person also is deemed to be
a beneficial owner of any securities which that person has the right to
acquire within sixty (60) days. Under these rules, more than one person may
be deemed to be a beneficial owner of the same securities and a person may
be deemed to be a beneficial owner of securities as of which he has no
economic or pecuniary interest. Except as set forth in the footnotes, the
persons named above have sole voting and investment power with respect to
all shares of Class A Common Stock and Class B Common Stock shown as being
beneficially owned by them.
(2) 53,770,664 shares of Class A Common Stock were outstanding as of April 15,
2000.
(3) 961,901 shares of Class B Common Stock were outstanding as of April 15,
2000.
(4) Includes 1,484,374 shares held by Brothers Investment Company, which
corporation is equally owned by John M. Belk and the heirs of Thomas M.
Belk. Voting and investment power is shared by John M. Belk and Katherine
McKay Belk.
(5) Includes 444,212 shares held by Milburn Investment Company, of which
Katherine McKay Belk is the majority stockholder, 599,898 shares held by
Katherine McKay Belk as custodian for her minor grand-children and 136,293
shares held by The Katherine and Thomas M. Belk Foundation.
(6) Includes 1,000 shares held by his wife, Lois Ann Daughtridge.
(7) Includes 1,785 shares held by Harriett D. Harris Irrevocable Trust dated
12/5/94 f/b/o Harriett B.D. Harris. Voting and investment power is vested in
John B. Daughtridge, Trustee.
(8) Includes 8,355 shares held as custodian for the minor children of her
brother, John B. Daughtridge.
8
EXECUTIVE COMPENSATION
The following table provides certain summary information concerning
compensation paid or accrued by the Company to or on behalf of the Company's
Chief Executive Officer and the four other most highly compensated executive
officers of the Company (referred to herein as the "Named Executive Officers")
for the fiscal years ended January 31, 1998, January 30, 1999 and January 29,
2000.
SUMMARY COMPENSATION TABLE
ANNUAL COMPENSATION(2)(3)
---------------------------------------------------------
FISCAL OTHER ANNUAL ALL OTHER
NAME AND PRINCIPAL POSITION(1) YEAR(4) SALARY($) BONUS($) COMPENSATION($) COMPENSATION($)
------------------------------ ------- --------- -------- --------------- ----------------
John M. Belk........................ 2000 $700,000 $363,580 $235,072(5)
Chairman; Chief Executive 1999 520,000 320,840 231,913(5)
Officer; Director 1998 500,000 180,000 231,980(5)
Thomas M. Belk, Jr.................. 2000 515,000 213,962 12,000(6)
President, Store Divisions and 1999 364,000 184,912 12,000(6)
Real Estate; Director 1998 350,000 125,000 10,578(6)
H. W. McKay Belk.................... 2000 515,000 213,962 12,000(6)
President, Merchandising and 1999 364,000 184,912 12,000(6)
Marketing; Director 1998 350,000 125,000 10,578(6)
John R. Belk........................ 2000 515,000 213,962 12,000(6)
President, Finance, Systems 1999 364,000 184,912 12,000(6)
and Operations; Director 1998 350,000 125,000 10,578(6)
Ralph A. Pitts...................... 2000 450,000 76,950 50,970(7)
Executive Vice President, 1999 416,000 47,385 12,000(6) 200,000(8)
General Counsel and Secretary 1998 387,000 50,000 11,250(6)
(1) The principal position given for each of the Named Executive Officers is the
principal position held as of January 29, 2000.
(2) All amounts reflect compensation paid by BSS or its subsidiary Belk
Administration Company ("BAC") unless otherwise indicated.
(3) Does not include retirement benefits under the Supplemental Pension Plan (as
defined herein) or the Pension Plan (as defined herein) (except for payments
to Mr. John M. Belk) (see "Supplemental Pension Plan" and "Pension Plan").
(4) Fiscal year 2000 is the year ended January 29, 2000. Fiscal year 1999 is the
year ended January 30, 1999. Fiscal year 1998 is the year ended January 31,
1998.
(5) Reflects (i) the economic value of life insurance premiums provided by
certain of the Belk Companies in the amount of $10,944 in fiscal year 2000,
$8,348 in fiscal year 1999 and $3,087 in fiscal year 1998 with respect to a
split-dollar life insurance policy for the benefit of Mr. John M. Belk and
his wife, Mrs. Claudia W. Belk (prior to fiscal year 2000, the Company
stated the value of the premiums as the full dollar amount of the premiums
paid; the Company has changed its disclosure method to reflect the economic
value of the premiums to the executive on an actuarial basis and has
restated prior year values in accordance with that method); (ii) $2,400 in
fiscal year 2000, $12,329 in fiscal year 1999 and $8,773 in fiscal year 1998
of benefits paid by BSS under the Belk Profit Sharing Plan (as defined
herein); (iii) $36,982 in fiscal year 2000, fiscal year 1999 and fiscal year
1998 of benefits paid by BSS under the Pension Plan (as defined herein);
(iv) $100,945 in fiscal year 2000, $90,453 in fiscal year 1999 and $99,337
in fiscal year 1998 of above-market interest earned by Mr. Belk on
compensation deferred in prior fiscal years pursuant to the Deferred
Compensation Plan (as defined herein); and (v) $83,801 in fiscal year 2000,
fiscal year 1999 and fiscal year 1998 of benefits paid by BSS under the
Supplemental Pension Plan (as defined herein).
(6) Reflects amounts contributed by BSS or BAC under the 401(k) Savings Plan
(see "401(k) Savings Plan").
9
(7) Reflects (i) amount contributed by BSS under the 401(k) Savings Plan in the
amount of $12,000 (see "401(k) Savings Plan") and (ii) amount reimbursed
during the fiscal year for the payment of taxes in the amount of $38,970.
(8) Reflects a special bonus paid following the reorganization of the Belk
Companies into Belk, Inc. (the "Reorganization"), which was completed on May
2, 1998. Mr. Pitts also was granted 6,000 shares of Class B Common Stock in
fiscal year 1999 and an additional 6,000 shares of Class B Common Stock in
fiscal year 2000.
The Company does not have employment agreements with any of the Named
Executive Officers.
PENSION PLAN
The Company maintains a pension plan (the "Pension Plan") that covers
substantially all of the employees of the Company. Benefits are based primarily
on years of service and the employees' compensation, subject to limitations
under the Code. The compensation covered by the Pension Plan for an employee
will be an amount equal to (a) the total cash compensation paid to such employee
by his employer through his payroll account during the plan year and reported on
his Form W-2; plus (b) all elective pre-tax contributions made for him under any
defined contribution plan sponsored by his employer; plus (c) all pre-tax
medical premiums paid on his behalf under Section 125 of the Code; and excluding
(d) all taxable fringe benefits reported on his Form W-2. The Company's policy
is to fund the Plan to satisfy the requirements of the Employee Retirement
Income Security Act of 1974 ("ERISA"). Generally, an employee is entitled upon
retirement to annual payments for each year of service in accordance with a set
formula comprised of both a basic benefit (specified dollar amount) and a
supplemental benefit. Current annual payments of $36,982 are made to Mr. John M.
Belk and the estimated benefits payable upon retirement at normal retirement age
for each other Named Executive Officer as of January 29, 2000 are $66,088,
$66,670, $67,650 and $57,392 for Messrs. Thomas M. Belk, Jr., H.W. McKay Belk,
John R. Belk and Ralph A. Pitts, respectively.
SUPPLEMENTAL PENSION PLAN
The Company maintains a supplemental executive retirement plan (the
"Supplemental Pension Plan") that covers a select group of management and highly
compensated employees (the "Covered Employees"). The following table sets forth
estimated annual target benefits available upon retirement with regard to the
Supplemental Plan.
(1) As of January 29, 2000, Mr. John M. Belk has the maximum of 35 credited
years of service; Mr. Thomas M. Belk, Jr. has an estimated 19 credited years
of service; Mr. H.W. McKay Belk has an estimated 21 credited years of
service; Mr. John R. Belk has an estimated 15 credited years of service; and
Mr. Ralph A. Pitts has an estimated 4 credited years of service.
(2) The compensation covered by the Supplemental Pension Plan includes base
salary and any bonus received. For each of the Named Executive Officers, the
current compensation covered by the Supplemental Pension Plan does not
differ by more than 10% from the amount listed in the "Salary" column of the
Summary Compensation table.
The Supplemental Pension Plan is maintained primarily for the purpose of
providing supplemental retirement benefits for the Covered Employees. The
Covered Employees have a non-forfeitable right to
10
receive a supplemental pension upon five years of service in the covered
position. Generally, the amount of the supplemental pension to which a Covered
Employee is entitled is an annual target amount computed in the form of a single
life annuity equal to 2.5% of his Average Final Earnings for each year of
service (in excess of five) up to a maximum of 35 years, reduced by any amounts
received due to the Pension Plan and Primary Social Security Benefits. "Average
Final Earnings" for purposes of the Supplemental Pension Plan is the average of
the Covered Employee's salary for the highest five years of the last ten years
of credited service.
401(K) SAVINGS PLAN
BSS maintained a profit sharing plan until December 31, 1997, when it was
terminated and its participants' account balances were transferred to a 401(k)
savings plan (the "Belk 401(k) Savings Plan" or "Plan"), which was adopted by
the Company as of January 1, 1998. The former profit sharing plan and the Belk
401(k) Savings Plan are substantially identical with respect to participation,
vesting and benefits. All employees of BSS and BAC (including officers and
directors who are employees) may participate in the Plan after one year of
service (1,000 hours) with BSS or BAC. Participating employees may make pre-tax
and after-tax contributions, subject to limitations under the Code, of a
percentage (not to exceed 15%) of their total compensation and such amounts (and
the earnings thereon) are fully vested at all times. As part of the Plan, BSS
and BAC make contributions of (a) 1.5% of annual compensation towards a "Fully
Vested Employer Contributions Account", which contributions are fully vested
(including the earnings thereon); and (b) 100% "matching" of participating
employees' contributions, up to 6% of annual compensation, towards a "Basic
Employer Contributions Account", which contributions become fully vested after
five years of service (including the earnings thereon) or upon the employee's
death, total disability or retirement.
DEFERRED COMPENSATION PLAN
The Company maintains a deferred compensation plan (the "Deferred
Compensation Plan"). Certain members of senior management of the Company may
participate in the Deferred Compensation Plan. Participants in the Deferred
Compensation Plan may elect to defer a portion of their regular compensation
subject to certain limitations prescribed by the Deferred Compensation Plan.
Eligible employees may enroll in the Deferred Compensation Plan every four
years. The Company is required to pay interest on the participant's deferred
compensation. The historical rates vary from between 8% and 15% per annum
EXECUTIVE OFFICERS
EXECUTIVE
NAME AGE POSITION OFFICER SINCE
---- --- -------- -------------
James M. Berry....................... 69 Executive Vice President, Finance 1998
Ralph A. Pitts....................... 46 Executive Vice President, General 1998
Counsel and Secretary
William L. Wilson.................... 52 Executive Vice President, Real Estate 1998
and Store Planning
Robert K. Kerr....................... 51 Executive Vice President, Systems 1999
Bill R. Walton....................... 51 Senior Vice President, Treasurer and 1998
Controller
The executive officers set forth above are in addition to those executive
officers who also serve as directors of the Company. See "-- Directors".
James M. Berry. Mr. Berry has served as Executive Vice President, Finance
of the Company since May 1998. Mr. Berry has been Executive Vice President,
Finance of BSS since 1995. From 1993 to 1995, he was retired. From 1988 to 1992,
Mr. Berry was Vice Chairman for NationsBank, Texas, N.A., a banking company. Mr.
Berry currently serves on the Board of Directors of Williams-Sonoma Corporation,
HCC Insurance Holdings, Inc. and Mecklenburg County Council of the Boy Scouts of
America. Mr. Berry has also served on the Board of Directors of NationsBank
Houston (Vice Chairman), NationsBank, Texas, N.A., Houston
11
Casualty Company, The Museum of Fine Arts, The Houston Museum of National
Science, Central Houston, Inc., the Metropolitan Board of the YMCA of the
Greater Houston Area, The Greater Houston Partnership and Junior Achievement of
Southeast Texas.
Ralph A. Pitts. Mr. Pitts has served as Executive Vice President, General
Counsel and Secretary for the Company since May 1998. Mr. Pitts has been
Executive Vice President and General Counsel of BSS since 1995. From 1985 to
1995, he was a partner in the law firm of King & Spalding in Atlanta, Georgia.
Mr. Pitts serves on the Boards of Central Piedmont Community College, the
Johnston Memorial YMCA, the Mecklenburg County Council of the Boy Scouts of
America and the Mint Museum of Art.
William L. Wilson. Mr. Wilson has served as Executive Vice President, Real
Estate and Store Planning for the Company since May 1998. Mr. Wilson has been
Executive Vice President, Real Estate of BSS since 1992. From 1989 to 1992, he
was Senior Vice President, Real Estate for BSS. Mr. Wilson is also a Trustee of
the International Council of Shopping Centers.
Robert K. Kerr. Mr. Kerr has served as Executive Vice President, Systems
for the Company since June 1999. Mr. Kerr has been employed by the Belk store
organization since 1971, and served as Executive Vice President and Partner of
the Atlanta group from 1991 to May 1998 and as a Divisional President from May
1998 to June 1999.
Bill R. Walton. Mr. Walton has served as Senior Vice President, Treasurer
and Controller of the Company since May 1998. Mr. Walton has been Senior Vice
President and Controller of BSS since 1992 and Treasurer since 1997. From 1987
to 1992, he was Vice President and Controller of BSS. Mr. Walton is a Certified
Public Accountant.
REPORT ON EXECUTIVE COMPENSATION
General
The Company does not have a Compensation Committee. Compensation paid to
the Company's principal executive officers, including the Named Executive
Officers, for the fiscal year ended January 29, 2000, was paid by BSS or BAC.
The general policies under which such compensation was paid were determined by
BSS and reviewed with the directors of the Company.
The Company's compensation philosophy is a "pay for performance" model
designed to attract and retain highly qualified executives and to align their
financial interests with those of the Company's stockholders. The Company's
specific objectives in determining compensation are (i) to provide appropriate
incentives designed to assist in assuring that the Company achieves its revenue
and earnings objectives; (ii) to ensure that the Company is able to attract and
retain loyal, high quality management; and (iii) to increase stockholder value.
The Company believes that executive pay should correlate to the level of
responsibility and performance of the executive on an individual basis.
Annual executive compensation for the fiscal year ending January 29, 2000
was comprised of a base salary and a possible cash incentive bonus. The base
salary for each executive is intended to reflect the scope of responsibilities
and duties of that executive on an annual basis. Annual base salary adjustments
are based upon performance measured against the accomplishment of individual
goals. Payment of the cash incentive bonus is determined by the Company's sales
and earnings performance measured against predetermined budgetary targets. The
cash bonus is computed as a percentage of the executive's base salary determined
by the extent to which the Company achieves those goals. The annual salary and
bonus earned by each of the Named Executive Officers for the fiscal year ending
January 29, 2000, is reflected in the Summary Compensation Table.
Compensation of Chief Executive Officer
John M. Belk has served as Chairman and Chief Executive Officer of the
Company since its formation in May 1998. During the fiscal year ending January
29, 2000, the Company set new records for financial performance. The Company's
sales volume and profits were the highest in the history of the Belk
organization,
12
and the Company's net income increased by 25% over the previous year. Mr. Belk
has continued to provide strong and consistent leadership during a time of
enormous change in the Belk organization, including the past year's
reorganization of the Company's operating divisions.
Mr. Belk does not have an employment agreement with the Company. Mr. Belk's
compensation for the fiscal year ending January 29, 2000, followed the model
outlined above. Mr. Belk's base salary was $700,000 with a cash incentive bonus
of $363,580. In addition, Mr. Belk received compensation in the form of
insurance premiums paid by the Company, benefits paid under the Belk Profit
Sharing Plan and Pension Plan and above-market interest earned on compensation
deferred in prior fiscal years pursuant to the Company's Deferred Compensation
Plan.
Section 162(m) of the Internal Revenue Code (the "Code") limits the tax
deductibility of compensation in excess of $1 million paid to the Named
Executive Officers unless the payments are made under a performance based plan
as defined in Section 162(m) of the Code. The Company believes that, with the
exception of salary and bonus paid to Mr. Belk in excess of $1 million, the
payments to Mr. Belk, and the other Named Executive Officers, earned during the
fiscal year ending January 29, 2000, meet the requirements of deductibility as
specified in the Code. While the Company recognizes that a small portion of the
compensation paid to Mr. Belk exceeds the deductibility limits under the Code,
the Company believes such compensation to be appropriate and intends to continue
to compensate the Chief Executive Officer in such a manner that maximizes the
allowable deductions while providing executive compensation that will remain
competitive in the industry.
Benefits
Benefits offered to key executives serve a different purpose than do other
elements of total compensation. In general, they are designed to provide a
safety net of protection against financial catastrophes that can result from
illness, disability or death, and to provide a reasonable level of retirement
incomes based on years of service with the Company. Benefits offered to key
executives are largely those offered to the general employee population, with
some variation, primarily to promote tax efficiency and replacement of benefit
opportunities lost due to regulatory limits.
Conclusion
The Company intends to continue to operate under, and to adjust as
necessary, its compensation policies and practices to assure that they are
consistent with the goals and objectives of the Company, with the primary
mission of increasing long-term stockholder value.
Board of Directors of BSS: John M. Belk, Chairman
James K. Glenn, Jr.
Thomas M. Belk, Jr.
H.W. McKay Belk
John R. Belk
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Several of the members of the Board of Directors of BSS who participated in
discussions regarding executive compensation for fiscal year 2000 have
relationships with the Company and its subsidiaries that are in addition to
their service as members of the Board of Directors of BSS. The following
officers of the Company participated in deliberations of the Board of Directors
of BSS concerning executive officer compensation:
Mr. John M. Belk has been Chairman of the Board and Chief Executive Officer
of the Company since May 1998. Mr. Belk is also Chairman of the Board and Chief
Executive Officer of BSS.
Mr. Thomas M. Belk, Jr. has been President, Store Divisions and Real Estate
of the Company since May 1998. Mr. Belk is also Vice Chairman of BSS, and was
President of most of the Belk Companies from March 1997 to May 1998.
13
Mr. H.W. McKay Belk has been President, Merchandising and Marketing of the
Company since May 1998. Mr. Belk was also Vice Chairman of most of the Belk
Companies from March 1997 to May 1998 and is currently President and Chief
Merchandising Officer of BSS.
Mr. John R. Belk has been President, Finance, Systems and Operations of the
Company since May 1998. Mr. Belk was Vice Chairman of most of the Belk Companies
until May 1998 and currently serves as President and Chief Operating Officer of
BSS.
SHAREHOLDER RETURN PERFORMANCE GRAPH
Neither the Class A Common Stock nor the Class B Common Stock was traded on
a public market during any part of fiscal year 2000. Accordingly, the stock
performance graph comparing the cumulative total shareholder return against
cumulative total return of the Standard & Poor's 500 Stock Index and the
Standard & Poor's Comparable Industry has been omitted.
CERTAIN TRANSACTIONS
The Company is a party to a contract with Godwin Elevator Company for
equipment maintenance in its Raleigh, North Carolina division. The total amount
paid by the Company for services under this contract in calendar year 1999 was
$50,244.07. Catherine H. Godwin, the daughter of Karl G. Hudson, Jr., is an
officer and owns in excess of 10% of Godwin Elevator Company.
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), requires the Company's officers, directors and persons who own
more than ten percent (10%) of the Common Stock to file certain reports with
respect to each such person's beneficial ownership of the Common Stock,
including statements of changes in beneficial ownership on Form 4. In addition,
Item 405 of Regulation S-K requires the Company to identify in its Proxy
Statement each reporting person who failed to file on a timely basis reports
required by Section 16(a) of the Exchange Act during the most recent fiscal year
or prior fiscal years. Based solely upon a review of Forms 3 and 4 and
amendments thereto, all such persons complied with the applicable reporting
requirements.
PROPOSAL NO. 2
BELK, INC. 2000 INCENTIVE STOCK PLAN
The stockholders of the Company are being asked to consider and approve the
adoption of the Belk, Inc. 2000 Incentive Stock Plan (the "Plan"). The Board of
Directors adopted the Plan effective as of November 19, 1999, subject to
approval by the stockholders at the Annual Meeting. The affirmative vote of the
holders of a majority of the shares of Common Stock present in person or by
proxy at the Annual Meeting will be required to approve the Plan. Abstentions
will have the effect of a vote "AGAINST" adoption of the Plan and broker
non-votes will not be counted as either "FOR" or "AGAINST" the adoption of the
Plan.
REASONS FOR ADOPTING THE PLAN
The Board believes that talented, dedicated key employees and directors
play a key role in the Company's sustained growth and financial success. In
order to improve the Company's ability to attract, retain and motivate superior
individuals, including non-employee directors, the Board has adopted an
incentive stock plan. The Board adopted the Plan subject to the approval of the
stockholders. Under the Plan, the Board may, in its discretion, grant any of the
following:
- Options to purchase shares of Class B Common Stock. Options granted
under the Plan may be either non-qualified stock options ("Non-ISOs"),
options intended to qualify as "incentive stock options" ("ISOs") under
Section 422 of the Internal Revenue Code of 1986, as amended (the
"Code"), or a combination of both.
14
- Stock appreciation rights ("SARs"). SARs are the right to receive, in
exchange for surrender of an option, cash equal to the fair market value
of the shares that are subject to the option, less the exercise price to
acquire those shares.
- Awards of Class B Common Stock. The Board may grant shares of Class B
Common Stock to key employees and may condition the grant of those shares
on the attainment of certain Company financial goals or performance
standards or may subject awards of Class B Common Stock to conditions
under which the grantee may be required to return the shares covered by
the awards to the Company.
The Board believes that grants of options, SARs and awards of Class B
Common Stock will strongly link the interests of recipient employees and
directors to those of the stockholders. Grants and awards will also provide
recipients with additional incentives to devote themselves to the Company's
future success.
The following is a summary of the plan's principal features. We have
attached a copy of the Plan as Exhibit A to this Proxy Statement.
SUMMARY OF THE PLAN
COMMON STOCK AVAILABLE UNDER THE BELK, INC. 2000 INCENTIVE STOCK PLAN
The Company has reserved 2,800,000 shares of Class B Common Stock for
issuance under the Plan. If there is a change in the Company's capitalization
that affects its outstanding Class B Common Stock, the Board or the committee
administering the Plan may adjust this number in order to preserve the benefits
the Company intends to provide under the Plan.
ADMINISTRATION
The Executive Committee or one or more committees that the Board designates
("the Committee") will administer the Plan. In order for grants of options under
the Plan to be exempt from the limitations on deductibility under Section 162(m)
of the Code, the Plan must be administered, at least as to optionees whose
compensation is subject to those limitations on deductibility, by a committee
composed exclusively of two or more outside directors. Outside directors are
members of the Board who meet certain tests under the tax laws for independence
from the Company's management.
ELIGIBILITY
The Board or the Committee when so authorized may make grants or awards to
key employees and directors. Grants and awards will be within the discretion of
the Board or the Committee. Therefore, it is impossible to predict to whom the
awards or grants will be made or the amount of the grants or awards.
STOCK OPTIONS
Under the Plan, the Board may authorize the Committee to award either
Non-ISOs or ISOs, to key employees and non-ISO's to directors. If a court or
governmental body determines that an award designated as an ISO does not qualify
as an ISO under the Code, then, under the Plan, the option will be treated as a
Non-ISO.
An option that is designated as an ISO may not become exercisable for the
first time during any one calendar year for shares of Class B Common Stock
having an aggregate fair market value in excess of $100,000. An option which is
designated as an ISO will, to the extent it exceeds these limitations, be
treated as a Non-ISO.
The Committee determines the terms of option awards, including their
amount, exercise price and term. The Committee will set forth the terms of each
option award in an award agreement that it will give to the grantee at the time
of the grant.
15
Limitation on Individual Option Grants
The Committee may not, in any calendar year, grant to any key employee
options or SARs representing more than 100,000 shares of Class B Common Stock.
If there is a change in the capitalization of the Company that affects the
outstanding Class B Common Stock, the Board or the Committee may adjust this
number in order to preserve the intended benefits under the Plan.
Term
The Committee establishes an expiration date for each option it grants. In
no event will an option be exercisable after the expiration date.
- For Non-ISOs, the term may not exceed ten years.
- For ISOs, the term generally may not exceed ten years. However, if the
grant is to an individual who, on the date of the grant, owns more than
ten percent of the outstanding Common Stock, then the term may not exceed
five years.
- An Option Certificate may provide for the exercise of an option after the
employment of a key employee has terminated for any reason, including
death or disability.
Exercise Price
The exercise price of an option may not be less than the "fair market
value" of a share of the Class B Common Stock on the date of the grant. Fair
market value is defined in the Plan as the price at which the Board acting in
good faith determines through any reasonable valuation method that a share of
Class B Common Stock might change hands between a willing buyer and a willing
seller, neither being under any compulsion to buy or to sell and both having
reasonable knowledge of the relevant facts. However, if the grantee owns more
than ten percent of the outstanding Class B Common Stock, then the per share
exercise price of an ISO must be at least 110% of the fair market value of a
share of Class B Common Stock on the date of the grant. Generally, grantees may
pay the exercise price of an option in cash, by check, or by Common Stock of the
Company that he or she has held for at least six months prior to the exercise of
the option, subject to acceptance by the committee.
STOCK APPRECIATION RIGHTS
Under the Plan, the Board may authorize the Committee to grant SARs to key
employees either in conjunction with any option that it grants under the Plan or
independent of any option.
- SARs may not be less than the fair market value of a share of the Class B
Common Stock on the date that the SAR is granted.
- The term of an SAR must not exceed ten years.
- An SAR may be granted as part of an option. If an SAR is evidenced by an
Option Certificate, the SAR value for each share of stock subject to the
SAR is the option price for the related option. Such SAR is only
exercisable while the related option is exercisable. The exercise of the
SAR with respect to any share of stock will cancel the optionee's right
to exercise the option with respect to that share, and conversely, the
exercise of the option for such share with respect to any share of stock
will cancel the SAR with respect to such share.
- The Committee will determine the form and time of any payment with
respect to an SAR.
CLASS B COMMON STOCK AWARDS
The Board or the Committee when so authorized may award shares of Class B
Common Stock to key employees, but no such awards for any calendar year may
exceed 100,000 shares. The stock may or may not be restricted. Restricted stock
awards are awards of Class B Common Stock that are subject to restrictions
during
16
a specified period. For example, the Committee may condition a restricted stock
award on a participant's continued service with the Company or on achieving
specified financial goals.
Restricted stock awards generally have the following characteristics:
- The grantee will forfeit the shares if the specified conditions are not
met.
- The grantee cannot transfer restricted shares during the restriction
period.
- The committee may specify that the Company will hold the restricted
shares during the restriction period.
- Notwithstanding these restrictions, the grantee is entitled to vote
restricted shares and receive any dividends during the restriction
period.
The Board or the Committee may also award Class B Common Stock without
restrictions. The Board or the Committee determines what, if anything, the
grantee must pay in order to receive the award of Class B Common Stock.
TRANSFERABILITY
No option, forfeitable restricted stock or SAR is transferable other than
by will or the laws of descent and distribution.
ADJUSTMENTS FOR CAPITAL CHANGES
If the Company's corporate structure or capitalization changes, and the
change affects the Class B Common Stock, the Board or the Committee will adjust:
- the aggregate number of shares reserved for issuance under the Plan, and
- the number of shares subject to outstanding options, SARs and stock
awards, together with option and SAR exercise prices.
The Committee will make these adjustments in order to preserve the benefits
the Plan is intended to provide.
CHANGE IN CONTROL
Upon a change in control of the Company, any and all conditions to the
exercise of outstanding options or SARs and any and all issuance and forfeiture
conditions on any restricted stock will be deemed to be satisfied in full, and
the Board has the right, to the extent required by the transaction, to cancel
any outstanding options, SARs and restricted stock after providing each key
employee and director the right to exercise his or her options or SARs and take
any other action necessary to receive the stock subject to any restricted stock
grants.
The Plan defines a Change of Control as (1) a "change in control" of the
Company of a nature that would be required to be reported in response to Item
6(e) of Schedule 14A for a proxy statement filed under Section 14(a) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), (2) a "person"
(as that term is used in Section 14(d)(2) of the Exchange Act) becomes after the
Effective Date the beneficial owner (as defined in Rule 13d-3 under the Exchange
Act) directly or indirectly of securities representing 50% or more of the
combined voting power for election of directors of the then outstanding
securities of the Company, (3) the individuals who at the beginning of any
period of two consecutive years or less constitute the Board cease for any
reason during such period to constitute at least a majority of the Board, unless
the election or nomination for election of each new member of the Board was
approved by vote of at least two-thirds of the members of the Board then still
in office who were members of the Board at the beginning of such period, (4) the
stockholders of the Company approve any dissolution or liquidation of the
Company or any sale or disposition of 50% or more of the assets or business of
the Company or (5) the stockholders of the Company approve a merger or
consolidation to which the Company is a party (other than
17
a merger or consolidation with a wholly-owned subsidiary of the Company) or a
share exchange in which the Company shall exchange shares of the Company for
shares of another corporation as a result of which the persons who were
stockholders of the Company immediately before the effective date of such
merger, consolidation or share exchange shall have beneficial ownership of less
than 50% of the combined voting power for election of directors of the surviving
corporation following the effective date of such merger, consolidation or share
exchange.
AMENDMENTS TO THE PLAN
The Board may, in its discretion, amend the Plan. However, the Board must
obtain stockholder approval in order to:
- increase the number of shares of Class B Common Stock reserved for ISO
grants, or
- change the class of persons eligible to receive ISOs.
If an amendment will adversely affect an option or award, the Board or the
Committee must obtain the consent of the affected grantee before so amending the
Plan.
SECURITIES REGISTRATION
As a condition to the receipt of shares of stock under the Plan, if
requested by the Company, each key employee and director must agree to hold such
shares of stock for investment purposes and not with a view of resale or
distribution to the public.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The Plan is not subject to the provisions of Section 401(a) of the Internal
Revenue Code.
Incentive Stock Options
A participant generally does not realize taxable income upon the grant or
exercise of an ISO under the Plan.
If a participant does not dispose of shares received upon exercise of an
ISO for at least
- two years from the date of grant, and
- one year from the date of exercise,
then upon sale of the shares:
- any amount realized in excess of the exercise price is taxed as long-term
capital gain, and
- any loss sustained will be a long-term capital loss.
If the participant has held the Class B Common Stock for more than 12
months, capital gains are subject to a maximum federal income tax rate of 20%.
Otherwise, capital gains are subject to the same tax rates as are applicable to
other income.
The exercise of an ISO gives rise to an adjustment in computing alternative
minimum taxable income that may result in alternative minimum tax liability for
the participant. Specifically, in computing alternative minimum taxable income
for the year in which the participant exercises the ISO, he or she must include
the amount by which the fair market value of a share at the time of exercise
exceeds the option exercise price. Currently, the maximum alternative minimum
tax rate is 28%. If an optionee pays alternative minimum tax with respect to the
exercise of an ISO, he or she may be able to use the amount of tax paid as a
credit against regular tax liability in subsequent years. The optionee's basis
in the shares for purposes of the alternative minimum tax will also be adjusted
when income from a disposition of the shares is included in alternative minimum
taxable income.
18
If the participant disposes of Class B Common Stock acquired by exercise of
an ISO before the end of the one and two-year holding periods described above,
he or she has made a disqualifying disposition. If a participant makes a
disqualifying disposition, he or she realizes ordinary income in the year of the
disposition generally to the extent that the lesser of the fair market value of
the Class B Common Stock on the date the option was exercised or the fair market
value at the time of the disqualifying disposition exceeds the exercise price.
Any amount realized upon a disqualifying disposition in excess of the fair
market value of the Class B Common Stock on the date of exercise generally will
be treated as either short-term or long-term capital gain, depending upon how
long the participant holds the Class B Common Stock. If a participant uses Class
B Common Stock that he or she acquires upon exercise of an ISO to pay the
exercise price of another option prior to the end of the holding period for the
Class B Common Stock, the disposition will be a disqualifying disposition.
The Company cannot take a deduction for federal income tax purposes at the
time of the grant or exercise of an ISO. At the time of a disqualifying
disposition by a participant, the Company generally will be entitled to a
deduction for federal income tax purposes equal to the amount taxable to the
participant as ordinary income in connection with the disqualifying disposition.
The Company is entitled to a deduction subject to the limitations on
deductibility generally applicable to compensation payments.
Non-Qualified Stock Options
The grant of a Non-ISO under the Plan will not generally be subject to
federal income tax. Upon exercise, however, the participant generally will
recognize ordinary income in an amount equal to the difference between the
exercise price and the fair market value of the shares on the date of exercise.
Gain or loss on the subsequent sale of Class B Common Stock received on exercise
of a Non-ISO generally will be either short-term or long-term capital gain or
loss, depending upon how long the participant holds the Class B Common Stock.
Upon exercise of a Non-ISO, the Company will be entitled to a compensation
deduction for federal income tax purposes in the year and in the same amount as
the participant recognizes and includes in his or her ordinary income, subject
to the limitations on deductibility generally applicable to compensation
payments. For example, under Section 162(m) of the Internal Revenue Code, the
Company may not take a deduction for remuneration it pays during any taxable
year to the chief executive officer or any of the four next most highly
compensated executive officers in excess of $1,000,000. Section 162(m) is known
as the "million dollar cap". For this purpose, remuneration excludes certain
performance-based compensation. The Company believes that the Plan design meets
all general requirements applicable to it under the performance-based
compensation rules in order for option grants to be treated as giving rise to
performance-based compensation. The Company anticipates that the Board or the
Committee will, to the extent feasible and appropriate, administer the Plan so
that option grants will in fact qualify as performance-based and any income
recognized on their exercise will be exempt from the million dollar cap.
Awards
Awards granted under the Plan may or may not be subject to restrictions
during a vesting period established with respect to the award. If an award is
fully vested as of the date it is granted, the excess of the value of the shares
transferred pursuant to the award over the amount, if any, that the recipient is
required to pay for the shares is treated as ordinary compensation income to the
recipient, and will be a deductible compensation expense to the Company, subject
to limitations on deductibility generally applicable to compensation payments.
If the award is subject to restrictions during a vesting period that are
properly treated as constituting a "substantial risk of forfeiture" for federal
income tax purposes, the recipient of an award will generally include in his or
her taxable income for federal income tax purposes the value of the shares over
the amount, if any, paid for the shares, as of the dates the shares become
vested. This income will be treated as ordinary compensation income in
determining his or her tax liability for the relevant year (as explained below).
19
In general, if property is transferred to an individual in connection with
arrangements related to compensation for services provided by that individual,
the excess of the fair market value of the property transferred over the
purchase price paid for the property, if any, is treated as taxable compensation
income (that is taxed as additional ordinary income). In the case of an award
granted for no purchase price, the full value of the shares transferred will be
treated as compensation income of the grantee. This income must be recognized,
absent an election under Section 83(b) of the Code, as explained below, at the
time the shares cease to be subject to a "substantial risk of forfeiture".
If shares transferred pursuant to an award are subject to forfeiture on,
for example, termination of employment of the recipient prior to the date the
shares "vest", that forfeiture may normally be treated as constituting a
substantial risk of forfeiture for these purposes. The recipient of such an
award would normally recognize the value of the shares granted as they become
vested, taking into account the value not as of the date the award was granted,
but as of the vesting date of the shares. On a sale of the shares, the award
recipient would calculate his or her capital gain or loss by reference to the
value of the shares on the vesting date, and would determine the character of
the gain or loss as long or short-term by measuring the holding period starting
as of the vesting date.
The recipient of an award that is subject to vesting may make an election
under Section 83(b) of the Code. The election will cause the recipient to
recognize an amount of ordinary income equal to the fair market value of the
shares transferred as of the date the award is granted (rather than as of the
vesting date), and on a subsequent sale of those shares, the holding period
would also be calculated by referenced to the grant date rather than the vesting
date. If the shares are subsequently forfeited, the employee will not be able to
claim a loss under applicable tax rules (which only permit recognition of a loss
if there has been a purchase price paid for the shares, and only to the extent
of such purchase price).
To make an election under Section 83(b) of the Code, a recipient of an
award that is subject to vesting must file the election no later than 30 days
after the date of the award. This is done by filing a written statement with the
IRS office where the employee files his or her returns, and filing a copy with
the Company. A copy of the filing must also be included in the participant's tax
return for the year of the purchase. The Section 83(b) election statement must
contain the following information: the name, address and taxpayer identification
number of the taxpayer, a description of the shares received, the date of the
award and the taxable year for which the election is made, the nature of the
restrictions on the shares, the fair market value of the shares as of the award
date, the purchase price paid for the shares, if any, and a statement indicating
that copies of the election have been furnished to other persons as required.
The statement must be signed by the participant and must indicate that it is
made under Section 83(b) of the Code. A copy of the Section 83(b) election must
be filed along with the award recipient's federal income tax return for the year
in which the award was granted.
THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974
The Plan is not subject to any provisions of the Employee Retirement Income
Security Act of 1974.
BOARD RECOMMENDATION
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL OF THE BELK, INC.
2000 INCENTIVE STOCK PLAN.
ANNUAL REPORT TO STOCKHOLDERS
The Annual Report of the Company for the year ended January 29, 2000
accompanies this Proxy Statement.
20
ANNUAL REPORT ON FORM 10-K
The Company will provide copies of the Company's Annual Report on Form
10-K, including the financial statements and financial statement schedules, as
filed with the Securities and Exchange Commission (the "Annual Report"), to
eligible stockholders upon request at no cost to such stockholders. The Company
will also provide copies of the exhibits to the Annual Report to eligible
stockholders upon request, for which the Company may impose a reasonable fee.
Requests for copies of either the Annual Report or the exhibits thereto should
be mailed to:
Belk, Inc.
2801 West Tyvola Road
Charlotte, North Carolina 28217
Attention: Ralph A. Pitts, Executive Vice President,
General Counsel and Secretary
STOCKHOLDER PROPOSALS
Any stockholder proposals intended to be presented at the Company's 2001
Annual Meeting of Stockholders in accordance with Rule 14a-8 of the Securities
Exchange Act of 1934 must be received by the Company no later than January 1,
2001 in order to be considered for inclusion in the Proxy Statement and form of
proxy to be distributed by the Board of Directors in connection with such
meeting.
Stockholder proposals brought before the Company's 2001 Annual Meeting of
Stockholders other than in accordance with Rule 14a-8 must satisfy the
requirements of the Company's Certificate of Incorporation. To be timely, notice
of such proposal must be given to the Secretary of the Company not less than 60,
nor more than 90 days prior to the meeting, unless less than 70 days' notice of
the meeting is provided to stockholders, in which case notice must be received
by the Secretary no later than ten days after the date notice of the meeting is
mailed or publicly disclosed by the Company. The notice must address the
specific information set forth in the Certificate of Incorporation.
The Company shall retain discretion to vote proxies on a proposal filed
within the above deadlines provided (i) the Company includes advice on the
nature of the proposal and how the Company intends to exercise its voting
discretion in the proxy statement and (ii) the proponent of such proposal does
not issue a proxy statement.
OTHER MATTERS
The Board knows of no other matters to be brought before the meeting.
However, if any other matters should come before the meeting, the persons named
in the proxies will vote such proxies in accordance with their judgment.
21
EXPENSES OF SOLICITATION
The cost of solicitation of proxies will be borne by the Company. In an
effort to have as large a representation at the meeting as possible, special
solicitation of proxies may, in certain instances, be made personally or by
telephone, facsimile or mail by one or more employees of the Company. The
Company also will reimburse brokers, banks, nominees and other fiduciaries for
postage and reasonable clerical expenses of forwarding the proxy material to
their principals who are beneficial owners of the Company's Common Stock.
By Order of the Board of Directors,
/s/ Ralph A. Pitts
Ralph A. Pitts
Executive Vice President,
General Counsel and Secretary
Charlotte, North Carolina
May 3, 2000
22
EXHIBIT 10.13
BELK, INC. 2000 INCENTIVE STOCK PLAN
SEC. 1
BACKGROUND AND PURPOSE
The purpose of this Plan is to promote the interest of Belk by authorizing
the Board to grant Stock, Options, Restricted Stock and/or Stock Appreciation
Rights to Key Employees and/or Directors in order (1) to attract and retain Key
Employees and Directors, (2) to provide an additional incentive to each Key
Employee or Director to work to increase the value of Stock and (3) to provide
each Key Employee or Director with a stake in the future of Belk which
corresponds to the stake of each of Belk's stockholders.
SEC. 2
DEFINITIONS
2.1 Affiliate. means any organization (other than a Subsidiary) that would
be treated as under common control with Belk under sec. 414(c) of the Code if
"50 percent" were substituted for "80 percent" in the income tax regulations
under sec. 414(c) of the Code.
2.2 Board -- means the Board of Directors of Belk.
2.3 Change in Control -- means (1) a "change in control" of Belk of a
nature that would be required to be reported in response to Item 6(e) of
Schedule 14A for a proxy statement filed under Section 14(a) of the 1934 Act,
(2) a "person" (as that term is used in Section 14(d)(2) of the 1934 Act)
becomes after the effective date of this Plan the beneficial owner (as defined
in Rule 13d-3 under the 1934 Act) directly or indirectly of securities
representing 50% or more of the combined voting power for election of directors
of the then outstanding securities of Belk, (3) the individuals who at the
beginning of any period of two consecutive years or less constitute the Board
cease for any reason during such period to constitute at least a majority of the
Board, unless the election or nomination for election of each new member of the
Board was approved by vote of at least two-thirds of the members of the Board
then still in office who were members of the Board at the beginning of such
period, (4) the shareholders of Belk approve any dissolution or liquidation of
Belk or any sale or disposition of 50% or more of the assets or business of Belk
or (5) the shareholders of Belk approve a merger or consolidation to which Belk
is a party (other than a merger or consolidation with a wholly-owned subsidiary
of Belk) or a share exchange in which Belk shall exchange Belk shares for shares
of another corporation as a result of which the persons who were shareholders of
Belk immediately before the effective date of such merger, consolidation or
share exchange shall have beneficial ownership of less than 50% of the combined
voting power for election of directors of the surviving corporation following
the effective date of such merger, consolidation or share exchange.
2.4 Code -- means the Internal Revenue Code of 1986, as amended.
2.5 Committee -- means the Executive Committee or such other committee as
the Board may designate.
2.6 Director -- means any member of the Board who is not an employee of
Belk or a Parent or Subsidiary or affiliate (as such term is defined in Rule 405
of the 1933 Act) of Belk.
2.7 Fair Market Value -- means the price at which the Board acting in good
faith determines through any reasonable valuation method that a share of Stock
might change hands between a willing buyer and a willing seller, neither being
under any compulsion to buy or to sell and both having reasonable knowledge of
the relevant facts.
2.8 ISO -- means an option granted under this Plan to purchase Stock which
is intended to satisfy the requirements of sec. 422 of the Code.
2.9 Key Employee. means an employee of Belk or any Subsidiary or Parent or
Affiliate designated by the Committee who, in the judgment of the Committee
acting in its absolute discretion, is key directly or indirectly to the success
of Belk.
2.10 1933 Act. means the Securities Act of 1933, as amended.
2.11 1934 Act. means the Securities Exchange Act of 1934, as amended.
2.12 Non-ISO. means an option granted under this Plan to purchase Stock
which is intended to fail to satisfy the requirements of sec. 422 of the Code.
2.13 Option. means an ISO or a Non-ISO which is granted under sec. 7 of
this Plan.
2.14 Option Certificate. means the written certificate which sets forth
the terms and conditions of an Option granted to a Key Employee or Director
under this Plan.
2.15 Option Price. means the price which shall be paid to purchase one
share of Stock upon the exercise of an Option granted under this Plan.
2.16 Parent. means any corporation which is a parent of Belk within the
meaning of sec. 424(e) of the Code.
2.17 Plan. means this Belk, Inc. 2000 Incentive Stock Plan as effective as
of the date adopted by the Board and as amended from time to time thereafter.
2.18 Restricted Stock. means Stock granted to a Key Employee under certain
conditions pursuant to sec. 9 of this Plan.
2.19 Restricted Stock Certificate. means the document which sets forth the
terms and conditions of a Restricted Stock grant to a Key Employee.
2.20 Rule 16b-3. means the exemption under Rule 16b-3 to Section 16(b) of
the 1934 Act or any successor to such rule.
2.21 Stock. means the Class B common stock of Belk.
2.22 SAR Value. means the value assigned by the Committee to a share of
Stock in connection with the grant of a Stock Appreciation Right under sec. 8.
2.23 Stock Appreciation Right. means a right to receive the appreciation
in a share of Stock which is granted under sec. 8 of this Plan.
2.24 Stock Appreciation Right Certificate. means the document which sets
forth the terms and conditions of a Stock Appreciation Right which is not
granted to a Key Employee as part of an Option.
2.25 Subsidiary. means a corporation which is a subsidiary corporation
(within the meaning of sec. 424(f) of the Code) of Belk.
2.26 Ten Percent Shareholder. means a person who owns (after taking into
account the attribution rules of sec. 424(d) of the Code) more than ten percent
of the total combined voting power of all classes of stock of either Belk, a
Subsidiary or Parent.
2.27 Belk. means Belk, Inc. and any successor to Belk, Inc.
SEC. 3
SHARES RESERVED UNDER PLAN
There shall (subject to sec. 13) be 2,800,000 shares of Stock reserved for
use under this Plan. Such shares of Stock shall be reserved to the extent that
Belk deems appropriate from authorized but unissued shares of Stock and from
shares of Stock which have been reacquired by Belk. Any shares of Stock subject
to an Option which remain unissued after the cancellation, expiration or
exchange of such Option, any shares of Restricted Stock which are forfeited or
canceled and any shares of Stock subject to a Stock Appreciation Right with
respect to which no exercise has been made under sec. 8 before the cancellation
or expiration of such Stock Appreciation Right thereafter shall again become
available for use under this Plan, but any shares of Stock used to exercise an
Option or to satisfy a withholding obligation shall not again become available
for use under this Plan.
SEC. 4
EFFECTIVE DATE
The effective date of this Plan shall be the date of its adoption by the
Board, provided the shareholders of Belk (acting at a duly called meeting of
such shareholders) approve such adoption within twelve (12) months of such
effective date. Any Option or Restricted Stock or Stock Appreciation Right
granted before such shareholder approval automatically shall be granted subject
to such approval.
SEC. 5
COMMITTEE
This Plan shall be administered by the Committee. The Committee acting in
its absolute discretion shall exercise such powers and take such action as
expressly called for under this Plan and, further, the Committee shall have the
power to interpret this Plan and (subject to sec. 13, sec. 14 and sec. 15 and
Rule 16b-3) to take such other action in the administration and operation of
this Plan as the Committee deems equitable under the circumstances, which action
shall be binding on Belk, on each affected Key Employee or Director and on each
other person directly or indirectly affected by such action.
SEC. 6
ELIGIBILITY AND ANNUAL GRANT CAPS
Only Key Employees who are employed by Belk or a Subsidiary or Parent shall
be eligible for the grant of ISOs under this Plan, and Key Employees and
Directors shall be eligible for the grant of Non-ISOs under this Plan. Only Key
Employees shall be eligible for the grant of Stock, Restricted Stock or Stock
Appreciation Rights under this Plan. No Key Employee in any calendar year shall
receive a Stock or Restricted Stock grant, Option or Stock Appreciation Right
with respect to more than 100,000 shares of stock.
SEC. 7
OPTIONS
7.1 Board Action. The Board acting in its absolute discretion may
authorize the Committee to grant Options to Directors and Key Employees under
this Plan from time to time to purchase shares of Stock and, further, the Board
may authorize the Committee to grant new Options in exchange for the
cancellation of outstanding Options which have a higher or lower Option Price
than the new Options. Each grant of an Option to a Key Employee shall be
evidenced by an Option Certificate, and each Option Certificate shall set forth
whether the Option is an ISO or a Non-ISO and shall set forth such other terms
and conditions of such grant as the Committee acting in its absolute discretion
deems consistent with the terms of this Plan; however, if the
Committee grants an ISO and a Non-ISO to a Key Employee on the same date, the
right of the Key Employee to exercise the ISO shall not be conditioned on his or
her failure to exercise the Non-ISO.
7.2 $100,000 Limit. No Option shall be treated as an ISO to the extent
that the aggregate Fair Market Value of the Stock subject to the Option which
would first become exercisable in any calendar year exceeds $100,000. Any such
excess shall instead automatically be treated as a Non-ISO. The Committee shall
interpret and administer the ISO limitation set forth in this sec. 7.2 in
accordance with sec. 422(d) of the Code, and the Committee shall treat this
sec. 7.2 as in effect only for those periods for which sec. 422(d) of the Code
is in effect.
7.3 Option Price. The Option Price for each share of Stock subject to an
Option which is granted to a Director or Key Employee shall be no less than the
Fair Market Value of a share of Stock on the date the Option is granted;
provided, however, if the Option is an ISO granted to a Key Employee who is a
Ten Percent Shareholder, the Option Price for each share of Stock subject to
such ISO shall be no less than 110% of the Fair Market Value of a share of Stock
on the date such ISO is granted. The Option Price shall be payable in full upon
the exercise of any Option, and at the discretion of the Committee an Option
Certificate can provide for the payment of the Option Price either in cash, by
check or in Stock which has been held for at least 6 months and which is
acceptable to the Committee or in any combination of cash, check and such Stock.
The Option Price in addition may be paid through any cashless exercise procedure
which is acceptable to the Committee or its delegate and which is facilitated
through a sale of Stock. Any payment made in Stock shall be treated as equal to
the Fair Market Value of such Stock on the date the certificate for such Stock
is presented to the Committee or its delegate in such form as acceptable to the
Committee.
7.4 Exercise Period. Each Option granted under this Plan to a Key Employee
shall be exercisable in whole or in part at such time or times as set forth in
the related Option Certificate, but no Option Certificate shall make an Option
granted to a Director or Key Employee exercisable on or after the earlier of
(1) the date such Option is exercised in full, or
(2) the date which is the fifth anniversary of the date the Option is
granted, if the Option is an ISO and the Key Employee is a Ten Percent
Shareholder on the date the Option is granted, or
(3) the date which is the tenth anniversary of the date the Option is
granted, if the Option is (a) a Non-ISO or (b) an ISO which is granted to a
Key Employee who is not a Ten Percent Shareholder on the date the Option is
granted.
An Option Certificate may provide for the exercise of an Option after the
employment of a Key Employee has terminated for any reason whatsoever, including
death or disability.
7.5 Grants to Directors. A Non-ISO granted to a Director under this
sec. 7.5 shall be subject to such other terms and conditions as the Committee
deems appropriate and proper under the circumstances, and no Director shall be
eligible to receive an Option under this Plan except as provided in this
sec. 7.5. A grant of a Non-ISO to a Director under this sec. 7.5 is intended to
be granted in a manner which continues to allow such Director to be a
"non-employee director" within the meaning of Rule 16b-3 and an "outside
director" within the meaning of sec. 162(m) of the Code, and all Non-ISOs
granted to Directors under this sec. 7.5 shall be construed to effect such
intent.
SEC. 8
STOCK APPRECIATION RIGHTS
8.1 Board Action. The Board acting in its absolute discretion may
authorize the Committee to grant a Stock Appreciation Right to a Key Employee
under this Plan from time to time, and each Stock Appreciation Right grant shall
be evidenced by a Stock Appreciation Right Certificate or, if such Stock
Appreciation Right is granted as part of an Option, shall be evidenced by the
Option Certificate for the related Option.
8.2 Terms and Conditions.
(1) Stock Appreciation Right Certificate. If a Stock Appreciation
Right is evidenced by a Stock Appreciation Right Certificate, such
certificate shall set forth the number of shares of Stock to which the Key
Employee has the right to appreciation and the SAR Value of each share of
Stock. Such SAR Value shall be no less than the Fair Market Value of a
share of Stock on the date that the Stock Appreciation Right is granted.
The Stock Appreciation Right Certificate shall set forth such other terms
and conditions for the exercise of the Stock Appreciation Right as the
Committee deems appropriate under the circumstances, but no Stock
Appreciation Right Certificate shall make a Stock Appreciation Right
exercisable on or after the date which is the tenth anniversary of the date
such Stock Appreciation Right is granted.
(2) Option Certificate. If a Stock Appreciation Right is evidenced by
an Option Certificate, the SAR Value for each share of Stock subject to the
Stock Appreciation Right shall be the Option Price for the related Option.
Each such Option Certificate shall provide that the exercise of the Stock
Appreciation Right with respect to any share of Stock shall cancel the Key
Employee's right to exercise his or her Option with respect to such share
and, conversely, that the exercise of the Option with respect to any share
of Stock shall cancel the Key Employee's right to exercise his or her Stock
Appreciation Right with respect to such share. A Stock Appreciation Right
which is granted as part of an Option shall be exercisable only while the
related Option is exercisable. The Option Certificate shall set forth such
other terms and conditions for the exercise of the Stock Appreciation Right
as the Committee deems appropriate under the circumstances.
8.3 Exercise. A Stock Appreciation Right shall be exercisable only when
the Fair Market Value of a share of Stock subject to such Stock Appreciation
Right exceeds the SAR Value for such share, and the payment due on exercise
shall be based on such excess with respect to the number of shares of Stock to
which the exercise relates. A Key Employee upon the exercise of his or her Stock
Appreciation Right shall receive a payment from Belk in cash or in Stock, or in
a combination of cash and Stock, and any payment in Stock shall be based on the
Fair Market Value of a share of Stock on the date the Stock Appreciation Right
is exercised. The Committee acting in its absolute discretion shall have the
right to determine the form and time of any payment under this sec. 8.3.
SEC. 9
STOCK
9.1 Board Action. The Board acting in its absolute discretion may
authorize the Committee to grant Stock to Key Employees under this Plan from
time to time and, further, shall have the right to make new Stock or Restricted
Stock grants in exchange for the cancellation of an outstanding Restricted Stock
grant to such Key Employee. Each Restricted Stock grant shall be evidenced by a
Restricted Stock Certificate, and each Restricted Stock Certificate shall set
forth the conditions under which Stock will be issued pursuant to the grant and
the conditions under which the Key Employee's interest in the underlying Stock
will become nonforfeitable.
9.2 Restricted Stock Grants.
(1) Conditions to Issuance of Stock. The Committee acting in its
absolute discretion may make the issuance of Stock to a Key Employee
subject to the satisfaction of one, or more than one, condition
which the Committee deems appropriate under the circumstances for Key
Employees generally or for a Key Employee in particular, and the related
Restricted Stock Certificate shall set forth each such condition and the
deadline for satisfying each such condition. Stock subject to a Restricted
Stock grant shall be issued in the name of a Key Employee only after each
such condition, if any, has been timely satisfied, and any Stock which is
so issued and is subject to forfeiture conditions pursuant to sec. 9.2(2)
shall be held by Belk pending the satisfaction of those forfeiture
conditions.
(2) Forfeiture Conditions. The Committee acting in its absolute
discretion may make Stock issued in the name of a Key Employee subject to
one, or more than one, objective employment, performance or other
forfeiture condition that the Committee acting in its absolute discretion
deems appropriate under the circumstances for Key Employees generally or
for a Key Employee in particular, and the related Restricted Stock
Certificate shall set forth each such forfeiture condition, if any, and the
deadline, if any, for Each share of Stock issued pursuant to a Restricted
Stock grant shall be unavailable under sec. 3 unless such share thereafter
is forfeited as a result of a failure to timely satisfy a forfeiture
condition, in which event such share of Stock shall again become available
under sec. 3 as of the date of such failure, satisfying each such
forfeiture condition.
9.3 Dividends and Voting Rights. If a cash dividend is paid on a share of
Stock issued to a Key Employee pursuant to a Restricted Stock grant which Stock
is subject to forfeiture conditions pursuant to sec. 9.2(2), Belk shall pay such
cash dividend directly to such Key Employee. Such Stock dividend shall be
treated as part of the Restricted Stock grant, and a Key Employee's interest in
such Stock dividend shall be forfeited or shall become nonforfeitable at the
same time as the Stock with respect to which the Stock dividend was paid is
forfeited or becomes nonforfeitable. The disposition of each other form of
dividend which is declared on such a share of Stock shall be made in accordance
with such rules as the Committee shall adopt with respect to each such dividend.
A Key Employee also shall have the right to vote such Stock.
9.4 Satisfaction of Forfeiture Conditions; Provision for Income Taxes. A
share of Stock shall cease to be Restricted Stock at such time as a Key
Employee's interest in such Stock becomes nonforfeitable under this Plan, and
the certificate representing such share shall be transferred to the Key Employee
as soon as practicable thereafter. The Committee acting in its absolute
discretion shall have the power to authorize and direct Belk to pay a cash bonus
(or to provide in the terms of the Restricted Stock Certificate for Belk to make
such payment) to a Key Employee to pay all, or any portion of, his or her
federal, state and local income tax liability which the Committee deems
attributable to a Stock or Restricted Stock grant, and to pay any such tax
liability attributable to such cash bonus.
9.5 Section 162(m). The Committee shall use its best efforts (where the
Committee deems appropriate under the circumstances) to grant Restricted Stock
either (1) subject to at least one condition which seems likely to result in the
Restricted Stock qualifying as "performance-based compensation" under
sec. 162(m) of the Code or (2) under such other circumstances as the Committee
deems likely to result in an income tax deduction for Belk with respect such
Restricted Stock grant.
SEC. 10
NONTRANSFERABILITY
No Option, forfeitable Restricted Stock or Stock Appreciation Right shall
(absent the Committee's consent) be transferable by a Key Employee or an
Director other than by will or by the laws of descent and distribution, and any
Option or Stock Appreciation Right shall (absent the Committee's consent) be
exercisable during a Key Employee's or Director's lifetime only by the Key
Employee or Director. The person or persons to whom an Option or Restricted
Stock or Stock Appreciation Right is transferred by will or by the laws of
descent and distribution (or with the Committee's consent) thereafter shall be
treated as the Key Employee or Director.
SEC. 11
SECURITIES REGISTRATION
As a condition to the receipt of shares of Stock under this Plan, the Key
Employee or Director shall, if so requested by Belk, agree to hold such shares
of Stock for investment and not with a view of resale or distribution to the
public and, if so requested by Belk, shall deliver to Belk a written statement
satisfactory to Belk to that effect. If so requested by Belk, the Key Employee
or Director shall make a written representation to Belk that he or she will not
sell or offer for sale any of such Stock unless a registration statement shall
be in effect with respect to such Stock under the 1933 Act and any applicable
state securities law or he or she shall have furnished to Belk an opinion in
form and substance satisfactory to Belk of legal counsel satisfactory to Belk
that such registration is not required. Certificates representing the Stock
transferred pursuant to a Stock or Restricted Stock grant or upon the exercise
of an Option or Stock Appreciation Right may at the discretion of Belk bear a
legend to the effect that such Stock has not been registered under the 1933 Act
or any applicable state securities law and that such Stock cannot be sold or
offered for sale in the absence of an effective registration statement as to
such Stock under the 1933 Act and any applicable state securities law or an
opinion in form and substance satisfactory to Belk of legal counsel satisfactory
to Belk that such registration is not required.
SEC. 12
LIFE OF PLAN
No Option, Stock, Restricted Stock or Stock Appreciation Right shall be
granted under this Plan on or after the earlier of
(1) the tenth anniversary of the effective date of this Plan (as
determined under sec. 4 of this Plan), in which event this Plan otherwise
thereafter shall continue in effect until all outstanding Options and Stock
Appreciation Rights have been exercised in full or no longer are
exercisable and all Restricted Stock grants under this Plan have been
forfeited or the forfeiture conditions, if any, on such Stock have been
satisfied in full, or
(2) the date on which all of the Stock reserved under sec. 3 of this
Plan has (as a result of Stock grants or the exercise of Options or Stock
Appreciation Rights granted under this Plan or the satisfaction of the
forfeiture conditions, if any, on Restricted Stock) been issued or no
longer is available for use under this Plan, in which event this Plan also
shall terminate on such date.
SEC. 13
ADJUSTMENT
13.1 Capital Structure. The number, kind or class (or any combination
thereof) of shares of Stock reserved under sec. 3 of this Plan, the annual grant
caps described in sec. 6 of this Plan, the number, kind or class (or any
combination thereof) of shares of Stock subject to Options or Stock Appreciation
Rights granted under this Plan and the Option Price of such Options and the SAR
Value of such Stock Appreciation Rights as well as the number, kind or class of
shares of Stock and Restricted Stock granted under this Plan shall be adjusted
by the Board in an equitable manner to reflect any change in the capitalization
of Belk, including, but not limited to, such changes as stock dividends or stock
splits.
13.2 Mergers. The Board as part of any corporate transaction described in
sec. 424(a) of the Code shall have the right to adjust (in any manner which the
Board in its discretion deems consistent with sec. 424(a) of the Code) the
number, kind or class (or any combination thereof) of shares of Stock reserved
under sec. 3 of this Plan and the annual grant caps described in sec. 6 of this
Plan. Furthermore, the Committee as part of any corporate transaction described
in sec. 424(a) of the Code shall have the right to adjust (in any manner which
the Board in its discretion deems consistent with sec. 424(a) of the Code) the
number, kind or class (or any combination thereof) of shares of Stock to be
issued under any Restricted Stock grants previously made under
29
this Plan and any related grant conditions and forfeiture conditions, and the
number, kind or class (or any combination thereof) of shares subject to Option
and Stock Appreciation Right grants previously made under this Plan and the
related Option Price and SAR Value for each such Option and Stock Appreciation
Right, and, further, shall have the right (in any manner which the Committee in
its discretion deems consistent with sec. 424(a) of the Code and without regard
to the annual grant caps described in sec. 6 of this Plan) to make Restricted
Stock, Option and Stock Appreciation Right grants to effect the assumption of,
or the substitution for, restricted stock, option and stock appreciation right
grants previously made by any other corporation to the extent that such
corporate transaction calls for such substitution or assumption of such
restricted stock, option or appreciation right grants.
13.3 Fractional Shares. If any adjustment under this sec. 13 would create
a fractional share of Stock or a right to acquire a fractional share of Stock,
such fractional share shall be disregarded and the number of shares of Stock
reserved under this Plan and the number subject to any Options or Stock
Appreciation Right grants and Restricted Stock grants shall be the next lower
number of shares of Stock, rounding all fractions downward. An adjustment made
under this sec. 13 by the Board shall be conclusive and binding on all affected
persons and, further, shall not constitute an increase in "the number of shares
reserved under sec. 3" within the meaning of sec. 15 of this Plan.
SEC. 14
SALE, MERGER OR CHANGE IN CONTROL
If on any date Belk agrees (whether or not such agreement is subject to the
approval of Belk's shareholders) to sell all or substantially all of its assets
or agrees to any merger, consolidation, reorganization, division or other
corporate transaction in which Stock is converted into another security or into
the right to receive securities or property or if a tender offer is made on any
date which could lead to a Change in Control (other than a tender offer by Belk
or an employee benefit plan established and maintained by Belk), or if there
otherwise is a Change in Control of Belk on any date, any and all conditions to
the exercise of all outstanding Options and Stock Appreciation Rights on such
date and any and all outstanding issuance and forfeiture conditions on any Stock
or Restricted Stock on such date automatically shall be deemed satisfied in
full, and the Board shall have the right (to the extent required as part of such
transaction) to cancel such Options, Stock Appreciation Rights and Restricted
Stock grants after providing each Key Employee and Director a reasonable
opportunity to exercise his or her Options and Stock Appreciation Rights and to
take such other action as necessary or appropriate to receive the Stock subject
to any Restricted Stock grants.
SEC. 15
AMENDMENT OR TERMINATION
This Plan may be amended by the Board from time to time to the extent that
the Board deems necessary or appropriate; provided, however, no such amendment
shall be made absent the approval of the shareholders of Belk required under
sec. 422 of the Code (1) to increase the number of shares of Stock reserved
under sec. 3 which can be used for ISO grants, or (2) to change the class of
employees eligible for Options which are ISOs. The Board also may suspend the
granting of Options or Stock Appreciation Rights, Stock or Restricted Stock
under this Plan at any time and may terminate this Plan at any time; provided,
however, the Board shall not have the right unilaterally to modify, amend or
cancel any Option, Stock Appreciation Right or Restricted Stock granted before
such suspension or termination unless (1) the Key Employee or Director consents
in writing to such modification, amendment or cancellation or (2) there is a
dissolution or liquidation of Belk or a transaction described in sec. 13 or
sec. 14 of this Plan.
30
SEC. 16
MISCELLANEOUS
16.1 Shareholder Rights. No Key Employee or Director shall have any rights
as a shareholder of Belk as a result of the grant of an Option or a Stock
Appreciation Right granted to him or her under this Plan or his or her exercise
of such Option or Stock Appreciation Right pending the actual delivery of the
Stock subject to such Option to such Key Employee or Director. Subject to
sec. 9, a Key Employee's rights as a shareholder in the shares of Stock
underlying a Restricted Stock grant shall be set forth in the related Restricted
Stock Certificate.
16.2 No Contract of Employment. The grant of an Option, a Stock
Appreciation Right or Stock or Restricted Stock to a Key Employee or Director
under this Plan shall not constitute a contract of employment or a right to
continue to serve on the Board and shall not confer on a Key Employee or
Director any rights upon his or her termination of employment or service in
addition to those rights, if any, expressly set forth in the related Option
Certificate, Stock Appreciation Right Certificate, or Restricted Stock
Certificate.
16.3 Withholding. Each Option, Stock Appreciation Right and Stock or
Restricted Stock grant shall be made subject to the condition that the Key
Employee or Director consents to whatever action the Committee directs to
satisfy the federal and state tax withholding requirements, if any, which the
Committee in its discretion deems applicable to the exercise of such Option or
Stock Appreciation Right or the satisfaction of any forfeiture conditions with
respect to Restricted Stock issued in the name of the Key Employee or Director.
The Committee also shall have the right to provide in an Option Certificate,
Stock Appreciation Right Certificate or a Restricted Stock Certificate that a
Key Employee or Director may elect to satisfy federal and state tax withholding
requirements through a reduction in the cash or the number of shares of Stock
actually transferred to him or to her under this Plan.
16.4 Construction. All references to sections (sec.) are to sections
(sec.) of this Plan unless otherwise indicated. This Plan shall be construed
under the laws of the State of Delaware. Finally, each term set forth in sec. 2
shall have the meaning set forth opposite such term for purposes of this Plan
and, for purposes of such definitions, the singular shall include the plural and
the plural shall include the singular.
16.5 Other Conditions. Each Option Certificate, Stock Appreciation Right
Certificate or Restricted Stock Certificate may require that a Key Employee or
Director (as a condition to the exercise of an Option or a Stock Appreciation
Right or a Restricted Stock grant) enter into any agreement or make such
representations prepared by Belk, including (without limitation) any agreement
which restricts the transfer of Stock acquired pursuant to the exercise of an
Option or a Stock Appreciation Right or Restricted Stock grant or provides for
the repurchase of such Stock by Belk.
16.6 Rule 16b-3. The Committee shall have the right to amend any Option,
Restricted Stock or Stock Appreciation Right grant or to withhold or otherwise
restrict the transfer of any Stock or cash under this Plan to a Key Employee or
Director as the Committee deems appropriate in order to satisfy any condition or
requirement under Rule 16b-3 to the extent Rule 16 of the 1934 Act might be
applicable to such grant or transfer.
16.7 Loans. If approved by the Committee, Belk may lend money to, or
guarantee loans made by a third party to, any Key Employee to finance all or a
part of the exercise of any Option granted under this, and the exercise of an
Option with the proceeds of any such loan shall be treated as an exercise or
purchase for cash under this Plan.
IN WITNESS WHEREOF, Belk, Inc. has caused its duly authorized officer to
execute this Plan to evidence its adoption of this Plan.
BELK, INC.
By:
Date:
31
PROXY PROXY
BELK, INC.
PROXY SOLICITED BY THE BOARD OF DIRECTORS FOR THE
ANNUAL MEETING OF STOCKHOLDERS ON MAY 24, 2000
The undersigned hereby appoints John M. Belk, Thomas M. Belk, Jr., H.W.
McKay Belk and John R. Belk, and each of them, proxies, with full power of
substitution and resubstitution, for and in the name of the undersigned, to vote
all shares of stock of Belk, Inc., which the undersigned would be entitled to
vote if personally present at the Annual Meeting of Stockholders to be held on
Wednesday, May 24, 2000, at 11:00 a.m., local time, at 2801 West Tyvola Road,
Charlotte, North Carolina 28217, and at any adjournment thereof, upon the
matters described in the accompanying Notice of Annual Meeting of Stockholders
and Proxy Statement, receipt of which is hereby acknowledged, and upon any other
business that may properly come before the meeting or any adjournment thereof.
Said proxies are directed to vote on the matters described in the Notice of
Annual Meeting and Proxy Statement as follows, and otherwise in their discretion
upon such other business as may properly come before the meeting or any
adjournment thereof.
1. TO ELECT THREE (3) DIRECTORS, WHOSE TERMS WILL EXPIRE AT THE 2003 ANNUAL
MEETING OF STOCKHOLDERS.
[ ] FOR ALL NOMINEES LISTED (EXCEPT [ ] WITHHOLD AUTHORITY TO
AS MARKED TO THE CONTRARY) VOTE FOR ALL NOMINEES LISTED
H.W. MCKAY BELK
KARL G. HUDSON, JR.
B. FRANK MATTHEWS, II
(INSTRUCTIONS: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE,
STRIKE A LINE THROUGH THE NOMINEE'S NAME IN THE LIST ABOVE.)
2. TO APPROVE THE BELK, INC. 2000 INCENTIVE STOCK PLAN
[ ] FOR THE BELK, INC. 2000 [ ] AGAINST THE BELK, INC. 2000 [ ] ABSTAIN
INCENTIVE STOCK PLAN INCENTIVE STOCK PLAN
THIS PROXY WILL BE VOTED AS DIRECTED, BUT IF NO DIRECTION IS INDICATED, THE
PROXY WILL BE VOTED FOR THE PROPOSALS LISTED ABOVE.
MAY , 2000
------------------------------
------------------------------
Please sign exactly as your
name or names appear hereon.
Where more than one owner is
shown above, each should sign.
When signing in a fiduciary or
representative capacity,
please give full title. If
this proxy is submitted by a
corporation, it should be
executed in the full corporate
name by a duly authorized
officer. If a partnership,
please sign in partnership
name by authorized person.
PLEASE COMPLETE, DATE AND SIGN THIS PROXY AND RETURN IT PROMPTLY IN THE ENCLOSED
ENVELOPE, WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING. IF YOU ATTEND
THE MEETING, YOU MAY VOTE IN PERSON IF YOU WISH, EVEN IF YOU HAVE PREVIOUSLY
Next Section
Previous Section